- •Banking 1 documentary credit
- •1.1 The importer applies to the bank for opening the credit
- •1.2 The buyer places an order and informs the seller of the opening of the l/c
- •1.3 The seller receives the order and confirms it
- •1.4 The bank advises the seller that the credit is available (I.E. Confirms the credit)
- •1.5 The seller sends the documents to the bank
- •Documentary credit part II
- •2.1 The buyer replies to the seller’s request to prolong the time of delivery and discusses amendments to the l/c
- •2.2 The buyer advises the bank of the amendment agreed upon with the seller
- •3.1 The buyer informs the seller of discrepancies in the documents
- •3.2 The buyer advises the seller of payment and asks to comply with the requirements of the credit
- •4 The bank advises the buyer of payment
- •Part II
- •Vocabulary
- •Part II
- •Part II
2.2 The buyer advises the bank of the amendment agreed upon with the seller
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ROSTRADE Moscow, Mytnaya 17 | ||
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Our ref. Your ref.
02 October 20__ Midland Bank Ltd 168 Fenchurch Str. London EC3P 3AP
Dear Sirs,
We would like to prolong L/C No. 14/MB/22./00 for USD 12,000.00 for 15 days.
Please amend the L/C as follows: Validity – delete 45 days and insert 60 days. All charges are for the Beneficiary’s account.
Thank you for your attention to the matter.
Yours faithfully, A.Tugay A.Tugay Manager
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3.1 The buyer informs the seller of discrepancies in the documents
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INTERMEDICINA Moscow Sadovaya 37 | ||
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Our ref. Your ref.
31 August 20__ D.Marlow & Co. Ltd. Prince of Wales Road Sheffield S9 4EX UK
Dear Sirs,
Yesterday we received a letter from City Bank NA, New York, advising us of several discrepancies in the documents forwarded by you to the bank blocking payment out of L/C No. C/25 for $231,000.00 opened by us.
We cannot agree to accept documents, which do not comply with the credit requirements and ask you to settle the problem with the bank without delay, as the validity of the L/C expires on the 15 September and it will be cancelled.
Your early reply will be greatly appreciated.
Yours faithfully, R.Vagapov R.Vagapov Chief Buyer
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3.2 The buyer advises the seller of payment and asks to comply with the requirements of the credit
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INTERMEDICINA Moscow Sadovaya 37 | ||
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Our ref. Your ref.
12 September 20__ D.Marlow & Co. Ltd. Prince of Wales Road Sheffield S9 4EX UK
Dear Sirs,
Our bank has advised us that the proceeds of our letter of credit No. C/25 have been credited to your account. We thank you for settling the problem with the bank promptly.
We should greatly appreciate it if you would present documents in strict compliance with the requirements of credits as we have signed three new contracts which provide for payment by letter of credit.
Yours faithfully, R.Vagapov R.Vagapov Chief Buyer
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4 The bank advises the buyer of payment
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Barnley’s Bank Ltd. Queens Building Cathays Park Cardiff CF1 9UJ
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Our ref. Your ref.
14 May 20__ OAO MIM Russia Kursk Lenin st. 24
Dear Sirs,
In accordance with your instructions of yesterday’s date we have accepted a draft for 70,000.00 euros drawn by Teletrans Inc., against surrender of shipping documents in compliance with the requirements of the L/C.
We have debited your account with the amount plus our charges. The documents will be handed to you at your earliest convenience.
Yours faithfully, T.Snowland T.Snowland Credit Department
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FOCUS 2. Comprehension questions
PART I
? What is documentary credit intended for?
? What are the stages in documentary credit operations?
? What are the advantages of documentary credit?
THE EXAMPLE OF AN IRREVOCABLE LETTER OF CREDIT
? Name the Seller and the Buyer.
? Who has given instructions to issue a L/C?
? In whose favour is this L/C issued?
? Name the issuing and the advising banks.
? On what condition is the L/C available?
? What do you know about documentary credit? Are L/Cs widely used in foreign trade?
LETTER 1.1
? What request does the letter contain?
? What document is enclosed with the letter?
? What information does the application form contain?
? What information does the importer need?
LETTER 1.2
? In what way will the payment out of the L/C be effected?
? Which party is to bear transportation charges?
? Which party is to cover insurance and bank commission?
LETTER 1.3
? What do the Sellers confirm by this letter?
? What are the terms of payment mentioned?
? When will the Sellers start making up the order?
LETTER 1.4
? What are the terms of payment stipulated in the letter?
? What is enclosed with the letter?
? Is partial shipment allowed?
LETTER 1.5
? What is the Sellers’ request to the Bank?
? What is enclosed with the letter?